Profit Maximization and the Prison Industrial Complex

Many thanks to Solangel Maldonado, Frank Pasquale, Kaimi Wenger and the Concurring Opinions crew for the invitation to guest blog in this space.

As I prepare to teach Dodge v. Ford in my Business Organizations course tomorrow afternoon, the seminal case that stands for the proposition that U.S. corporations exist to maximize profits for its shareholders, my mind is drawn to private prison corporations and the prison industrial complex. Each semester that I teach Bus. Org., I often ask my students to imagine themselves in the shoes of a particular corporation’s member of the Board of Directors as we study the decisions that led a company into a particular dispute or lawsuit. When teaching the Dodge v. Ford case, I challenge the students to think through how they would react as Ford Board members to Henry Ford’s repeated decisions to consistently lower the price of his vehicles in an early 1900s era where his car sales dominated the American auto industry. They are to consider Ford’s decision to lower prices against the required goal of the Ford Motor Co. to work diligently to increase profits for its shareholders (in this case the Dodge Bros. were significant shareholders in Ford Motor Co.). Often this exercise will situate the students around an imagined large boardroom table during a Board meeting, as Board members debate, discuss, argue, cajole, and conceptualize how the corporation can better increase profit streams, open new markets, streamline products and delivery mechanisms, and run more efficiently. One can imagine that the Ford Board might have considered raising the prices of its cars that were selling very briskly, building additional factories and plants to manufacture additional cars and parts, inspiring its labor force to work more diligently with steadier pay, etc.

After carefully reading “The New Jim Crow” by Michelle Alexander last year, referenced in this blog space by Frank Pasquale, I find myself constantly thinking about Mass Incarceration from the perspective of the prison industrial complex and the corporatization of the prison industry. In Alexander’s tour de force, she persuasively makes the case that Mass Incarceration is the civil rights issue of our generation. She argues that the War on Drugs has functioned as a re-subordination of African American and Latino men, a new Jim Crow of sorts, that continues to lay waste to urban city centers and the families of those that are incarcerated under our onerous drug policies in the United States. As I go into the classroom to teach “profit maximization” tomorrow, I find myself wondering about what happens exactly during the Board meetings of the Corrections Corporation of America (CCA) and the Geo Group (formerly Wackenhunt), the two largest private prison corporations, as they engage the process of increasing profit streams, opening new markets, and running the business more cost effectively. Is it possible, that the Board of Directors of private prison companies, sitting around that boardroom table, are literally strategizing ways to increase the prison population in the United States? To effectively increase profits for shareholders, are private prison companies not only cutting services to prisoners as a way to increase profits, but are they now drafting policies, lobbying politicians, and actively debating ways to ensure that a steady stream of “clients” continues into the private prisons that are proliferating across the United States (now over 25% of prisoners are housed in private prison facilities)? Emerging evidence appears to suggest that the answer to these questions is yes. The thought that incarcerating more and more American citizens may be a policy goal for private prison companies is to me, a chilling and immoral conceptualization. In future posts this month I will detail the emerging evidence that appears to support the proposition that perverse incentives are actively influencing the private prison company executive and Board member.